Category: Taxes

Hello there, I’m Tony, and welcome to a very special Financial Friday.

You might notice things look a little different around here. As we continue our climb together, I’m officially transitioning this weekly update to Financial Friday. It’s a small change that reflects our growing community of professionals dedicated to mastering their Monthly Money and reaching the summit of their own Financial Ascent.

Now, as we head into the final week of the year, I can’t help but think of that old Christmas song. Santa is busy making his list and checking it twice—and if you want to end 2025 on the “Nice List” for your future self, you need to do the same.

While everyone else is rushing to the mall, we’re sprinting toward the December 31st hard deadline. These are the final, irreversible actions to maximize your wealth before the clock strikes midnight.

1. The 401(k) and 403(b)Catch-Up Sprint

If you haven’t maxed out your contributions yet, this is your final call. For 2025, the base limit is $23,500.

The Power Move: If you are age 50 or older, you get a “catch-up” bonus of $7,500, bringing your total to $31,000. And if you’re between 60 and 63, 2025 introduced a special “super catch-up” of $11,250 (for a total of $34,750).

• Actionable Step: Check your last pay stub. If you’re short, contact HR immediately to see if you can squeeze one last contribution into your final 2025 paycheck.

Pro-Tip: The 403(b) “15-Year” Secret

If you work for a nonprofit, hospital, or public school and have been with the same employer for 15 years or more, you might have a hidden gift waiting for you. Many 403(b) plans allow a “special catch-up” of up to $3,000 extra per year (with a $15,000 lifetime cap), regardless of your age. If you’re over 50, you can often “stack” this on top of your standard catch-up. Check with your plan administrator—this is a high-level move to supercharge your ascent in these final days of the year!

2. The “Use It or Lose It” FSA Sweep

Unlike your HSA, the money in a Flexible Spending Account (FSA) is often a ticking time bomb. If you don’t spend it by December 31st (or your plan’s specific grace period), that Monthly Money goes back to your employer.

• The Move: Don’t leave money on the table. If you have a balance, now is the time to buy those extra pairs of prescription glasses, stock up on high-end sunblock, or schedule that last-minute dental cleaning. Think of it as a pre-paid Christmas gift to your health.

3. The Hard Deadline Trio: RMDs, Roth Conversions, and Gifts

There are three moves that have zero “grace periods.” Once the ball drops, the window for 2025 slams shut.

• Required Minimum Distributions (RMDs): If you are 73 or older, or have an Inherited IRA, you must take your RMD by December 31st. The penalty for missing it is a staggering 25% of the amount you should have withdrawn. Check those accounts twice!
• Roth Conversions: If you’re looking to convert traditional IRA funds into a Roth IRA to lock in current tax rates, the paperwork must be completed by December 31st to count for the 2025 tax year.
• Annual Gift Exclusion: You can give up to $19,000 per person in 2025 without triggering a gift tax return. If you’re helping children or grandchildren, make sure the checks are cashed or the transfers are initiated now.
  

Tony’s Final Thought for 2025

Discipline isn’t just about saying “no” to bad habits; it’s about saying “yes” to the final actions that protect your progress. By checking these items off your list now, you can head into Christmas morning knowing your financial house is in perfect order.

Actionable Step: Spend 15 minutes today reviewing your FSA balance and your 401(k) and 403(b) totals. It’s the best “gift” you’ll give yourself all year.

Next Week: We move from the sprint to the blueprint. I’ll be sharing the 2026 Financial Roadmap to help you start the New Year at full speed.

Hello there, I’m Tony, and welcome back to Financial Friday!

In the last few weeks, we’ve covered the defensive plays—from shielding your budget against Black Friday debt to making tax-smart donations of your winners. You are in control of your spending and maximizing your charitable impact.

Now, we focus on the final, advanced investment move for the year: Tax-Loss Harvesting.

It sounds a bit silly, doesn’t it? As disciplined investors, we want to buy low and sell high. But right now, we need to look at our losses not as mistakes, but as opportunities to minimize the taxes due in three months. This strategic move is all part of making the most efficient ascent to the top of our Wealth Mountain.

This simple action—Tax-Loss Harvesting—is the final power move to keep more of your hard-earned Monthly Money working for your family’s future.

---

1. The Big Idea: Turning Lemons Into Tax Savings

The concept is simple: The IRS allows you to use your investing losses to offset your investing gains.

If you have realized capital gains this year—say, you sold a successful position or received a large distribution from a mutual fund—the IRS will tax you on that profit. Tax-Loss Harvesting uses your portfolio’s losses to offset those profits.

The Math: A Simple Opportunity to “Hide” Gains

• The Problem: You have $10,000 in realized gains (taxable profit).
• The Opportunity: You find a stock or ETF that you bought but is currently worth $8,000 less than what you paid for it.
• The Action: You sell that losing position before December 31st to “realize” the $8,000 loss.
• The Result: You only report a net gain of $2,000$ ($10,000 – $8,000) that is subject to tax. You just used your losses to “hide” $8,000 of your gains from the IRS!

The Extra Bonus: The $3,000 Deduction

If your losses exceed your gains, you get an extra gift:

• You can use up to $3,000 of any remaining net loss to offset your ordinary income (your salary). This is a direct deduction that lowers your taxable income.
• Any losses beyond that $3,000 can be carried forward indefinitely to offset future gains. Your loss never expires!

---

2. Don’t Get Caught in the Year-End Market Noise

You are right to notice that the market can get a bit volatile right now. This is a common phenomenon driven by larger investors and institutional fund managers making massive, time-sensitive tax moves.

• The Effect: You might see disproportionate selling in certain sectors where big funds are “cleaning house”—selling their losers to realize tax losses before the deadline. This can cause brief, strange dips in a stock’s price, creating market “noise.”
• Your Strategy: The Ascender’s job is not to react to this noise, but to use it. This is simply the market executing a strategy you should be executing, too. Have your plan ready, identify your target losers, and don’t let temporary dips or volatility scare you out of making your own calculated tax move.

---

3. The Decisive Action: The “Sell and Swap” Rule

This is where the strategy moves from simple to smart. You can’t just sell a loser and buy it back immediately; the IRS is watching!

The Wash-Sale Rule prevents you from claiming a tax loss if you buy the same stock or a “substantially identical” security in the 61-day window (30 days before the sale, the day of the sale, and 30 days after the sale).

The rule is designed to stop people from getting a tax break while never leaving their position. But as Ascenders, we don’t want to leave the market! We want to stay invested and growing.

The Solution: The “Sell and Swap”

You must sell the loser and immediately buy a similar, but not identical, replacement.

If you sell…	You can immediately buy…	Why it works
A major S&P 500 ETF (e.g., VOO)	An S&P 500 ETF from a different company (e.g., SCHX)	You stay invested in the U.S. stock market without violating the “substantially identical” rule.
A specific tech stock (e.g., Intel)	A different stock in the same sector (e.g., AMD)	You maintain your exposure to the technology market.

The key is to remain invested so your money is always working for you, but to avoid buying the exact same ticker symbol for at least 31 days. This single, disciplined move protects your deduction and your compounding.

---

4. Your Actionable Plan Before December 31st

The clock is ticking on 2025. You must execute this transaction before the market closes on December 31st to claim the loss this year.

1. Run the Report: Log into your taxable brokerage account. Pull the realized gains data for the year. See how much profit you have locked in.
2. Identify the Target: Scroll through your holdings and find any investment with an unrealized loss.
3. Plan the Swap: Before you click “Sell,” know exactly which similar-but-different stock or ETF you are going to buy immediately afterward. Write down the ticker symbols.
4. Execute the Trade: Sell the loser and execute the buy order for the replacement immediately.

This is a true Monthly Money power move. It’s proactive, efficient, and ensures you keep more of your money working to fund your freedom and your family’s future.

---

Your Next Action: Run that report today and make a list of your “Sell” and “Swap” targets.

Hello there, I’m Tony, and welcome to another Financial Friday!

Last week, we deployed our Black Friday Shield and focused on defensive spending—setting clear limits to protect our Monthly Money from holiday debt.

This week, we shift to offense.

As established professionals on the journey of The Financial Ascent, December isn’t just about shopping; it’s the critical deadline to execute tax-smart strategies that can save you thousands.

Charity is a core value for many of us. But for high-earners like you, simply writing a check is often the least efficient way to give. Let’s make sure your generosity achieves a powerful double benefit: making a great impact and cutting your tax bill.

---

1. The Power of Paperwork: Don’t Forget the Basics

Before we dive into the advanced strategies, let’s nail the simple stuff, because every dollar counts on your tax return.

• Cash is Simple: If you make an outright donation of cash or use your credit card, you get a direct itemized deduction (up to 60% of your Adjusted Gross Income, or AGI). But remember, you need to itemize your deductions for this to matter. If you do use a credit card, at least make sure it’s a cash-back rewards card to get some money back!
• Non-Cash Deductions: That old couch to Goodwill or those clothes to the Salvation Army? You can deduct the fair market value of those items.
• Actionable Step: For any non-cash gift, you must get a receipt and itemize the donation. For itemizers, those receipts are worth real money. The most common mistake I saw as an advisor was people throwing out these receipts. Hold onto those records!

---

2. The Double Benefit: Donating Appreciated Stock

This is the single most powerful and overlooked strategy for Ascenders with taxable brokerage accounts. If you have any stocks that have gone up significantly since you bought them (appreciated assets)—which is likely after a strong market year—you should almost never sell them to get cash for charity.

The Problem with Selling

If you sell a stock to donate the cash, you immediately trigger capital gains tax on the profit. That tax bill shrinks the amount of money you have left to give—and it costs you. Do yourself and your charities a favor and be efficient!

The Tax-Smart Solution

Instead of selling, donate the stock directly to a qualified charity.

• Benefit 1 (Deduction): You get an immediate income tax deduction for the full fair market value of the stock, just as if you had donated cash.
• Benefit 2 (Avoidance): You completely avoid paying the capital gains tax on the profit you never realized.

This is a Monthly Money masterstroke: the IRS lets you deduct the gain without ever taxing you on it. It maximizes your giving power and frees up more money for your investment portfolio.

---

3. The High-Earner Play: Charitable Bunching with a DAF

For high-earning households, a major challenge is that the Standard Deduction is so high, many struggle to clear the bar to make itemizing worthwhile. This is where bunching comes in—it’s the perfect blend of tax strategy and consistent giving, and it’s why the Donor-Advised Fund (DAF) is your new best friend.

What is Bunching?

Bunching is when you consolidate two or more years’ worth of charitable giving into a single calendar year.

• Year 1 (The Bunch Year): You make a large donation that—when combined with your mortgage interest and state taxes—pushes your total itemized deductions above the Standard Deduction threshold. You itemize and take the massive tax break this year.
• Year 2 & 3 (The Standard Years): You revert to taking the Standard Deduction, which is now the more efficient choice.

The Role of the Donor-Advised Fund (DAF)

The DAF is a simple, low-cost account housed at a public charity (like Fidelity, Schwab, or Vanguard). It makes bunching possible and flexible:

• Immediate Deduction: You contribute the bunched amount (cash or appreciated stock) to the DAF in your “Bunch Year” (e.g., 2025) and receive the full tax deduction now.
• Consistent Giving: The money in the DAF is invested tax-free. You then recommend grants from that DAF to your favorite charities monthly or annually over the next two or three years.

This allows you to achieve the massive one-time tax saving you need, while maintaining the consistent, life-changing support your charities rely on. It’s the ultimate expression of the Monthly Money philosophy applied to giving.

---

Your Actionable Step Before December 31st

The clock is ticking on 2025. If you want to use these strategies, the transactions must settle by the end of the year.

• Actionable Step: Review your brokerage account. Identify any long-term holdings (held for more than one year) that have significant unrealized gains. Contact your financial institution today about making a direct transfer of that stock to a charity or a new DAF.

This single move can easily net you a triple-digit deduction on your tax return. That’s more Monthly Money in your pocket, ready to fund your own ascent.

---

Your Next Action: If you don’t already have one, start the paperwork to open a Donor-Advised Fund (DAF) today, and identify a position in your investment account with high appreciation that you could donate.